A Landmark Settlement Rings In A New Era Of College Sports. Will The Tradition We Love Survive?

The following article was adapted from a “Morning Wire” interview with “Crain & Company” host David Cone that was released on Wednesday, June 11. 

A new era has dawned in the world of college sports. Something that was illegal just a week ago – schools paying players – is now the law of the land. 

Last week, a settlement was approved in the case, House vs. NCAA, a class-action lawsuit that claimed the NCAA was illegally limiting the earning potential of college athletes. This agreement ends three separate antitrust lawsuits, and it means schools can now begin paying their athletes directly. 

Outkick’s Trey Wallace joined us over at “Crain & Company” earlier this week to lay out how he believes this decision will affect college athletics going forward. Wallace said the settlement will eventually lead to some schools cutting certain sports.

“I hate to say it,” Wallace told us. “But you’re gonna see cuts in track and field, rowing, volleyball, mid-major softball programs. You can’t afford them anymore. You’re relying on football to pay the bills.” 

With this settlement comes an annual cap, much like a salary cap in professional sports, and it is expected to start at roughly $20.5 million per school in 2025-26. It will then increase every year during the decade-long deal. These new payments are in addition to scholarships and other benefits the athletes already receive.

The first checks will be cut on July 1, so schools and conferences need to act quickly and establish the necessary infrastructure to enforce their new rules. And this doesn’t just affect current and future athletes; the NCAA will also pay nearly $2.8 billion in back damages over the next 10 years to athletes who competed in college at any time from 2016 through the present day.

In short, this is a shift from name, image, and likeness (NIL) deals student athletes made with companies and collectives to direct pay from the schools. So the cases of O’Bannon vs. NCAA and Alston vs. NCAA paved the way for college athletes to receive NIL money, but those payments were coming from third parties rather than from the athletic programs themselves. This settlement allows schools to share their revenue directly with athletes for the first time, and it also enables programs to create new rules designed to limit the influence of boosters and collectives. Starting this summer, any endorsement deal between a booster and an athlete will be vetted to ensure it’s for a “valid business purpose” rather than a recruiting incentive.

Now, what will be interesting to monitor is how each athletic director allocates that $20.5 million between their various sports, as Wallace hinted at in his interview with us. Another thing to watch for is how each program will continue to incorporate NIL deals on top of the revenue-sharing payments.

This development still won’t end the debates regarding how long athletes can compete at the college level, and whether or not they should be considered employees who are represented by a union for the purposes of collective bargaining. 

However, NCAA president Charlie Baker does believe this will help regulate what has been a very volatile market in college sports. In an open letter posted last Friday, Baker stated, “This is new terrain for everyone. Given the defendant conferences’ new ownership of complicated pieces of rulemaking and enforcement, there will be a transition period and certainly bumps in the road. Opportunities to drive transformative change don’t come often to organizations like ours. It’s important we make the most of this one. We have accomplished a lot over the last several months, from new health and wellness and academic requirements to a stronger financial footing. Together, we can use this new beginning to launch college sports into the future, too.”